Marc Goldwein, Senior Vice President for Committee for a Responsible Federal Budget, calls the current partial shutdown a "baby version" of last year’s furlough-driven crisis costing tens of billions. With DHS funding stalled and debt nearing $38 trillion (100% debt-to-GDP), he warns rapid growth risks investor panic, inflation, or austerity—citing EU, China, and Japan as key watchers. Trump’s "One Big Beautiful Bill" locked in $75B for DHS but adds $4T to debt over a decade; tariffs may help, but Supreme Court rulings could deepen deficits. The shutdown’s delay, despite October 1 deadlines, underscores fiscal instability, while upcoming votes and Treasury testimony reveal deeper tensions over economic policy and election oversight. [Automatically generated summary]
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Joining us this morning is Mark Goldwine, Senior Vice President for Committee for a Responsible Federal Budget.
Mark, thanks so much for being with us this morning.
Thanks for having me.
All right, let's dive right in.
Earlier in the program, we were talking about the partial shutdown.
I want to get back to that.
Obviously, that's still in play, though it is expected that they will vote to reopen the government later on today.
Still, though, what does this period right now we're in mean for the U.S. economically?
Well, look, this is kind of like a baby shutdown, right?
Back at the end of last year, we had a very large, long government shutdown where lots of people were furloughed.
Agencies weren't able to do their jobs.
This is almost a funding lapse.
You know, the government shut down Saturday.
Most federal workers are still coming into work.
There's going to be a deal probably soon.
And so those that aren't will be coming in the next few days.
And so the economic impact should be pretty minimal.
Nonetheless, it's a completely useless disruption, right?
Like the procrastination is ridiculous.
The funding bills were supposed to be passed October 1.
Here we are in February, and we still haven't funded the government.
You mentioned that this is kind of a baby one compared to the one last year.
How much did that one cost us?
So it's not that it cost the government money, it's that it wasted us money because we keep paying those federal employees.
We keep paying for all that electricity, but we're not providing the services.
And so to the economy, it was tens of billions of dollars of lost government services effectively.
And they're trying to catch up and bring it back, but that's really tough, especially when you're operating on these continuing resolutions.
And I mean, that's one of the reasons why President Trump has basically been against another shutdown, despite the fact that these are concerns over DHS because he continues to bring up how much the last one wasted money.
You said that this is about procrastination, but Congress is on track now finally to pass all of its appropriation bills.
I wonder what the American people should make of that.
Yeah, so what they're really going to do is they're going to pass all the bills except for Department of Homeland Security.
The plan right now, which I think will go forward, is Department of Homeland Security gets a two-month, two-week extension, excuse me, and then they renegotiate.
And it's possible those negotiations failed and they end up in a shutdown.
Now, there's this weird thing where under Trump's One Big Beautiful Bill Act, there was a bunch of appropriations that were mandatory for Department of Homeland Security.
And so it may be able to continue to sustain itself even through a long shutdown.
Yeah, I think that number was about $75 billion.
That's right.
If it shuts down in 10 days, if there is no conclusion to those reforms.
I want to turn to the debt, something that I know our audience is really interested in.
So let me tell you guys how to join in on the conversation.
Republicans, your number is 202-748-8001.
Democrats, your number is 202-748-8000.
Independence, your number is 202-748-8002.
I want you to start calling in now so we can talk about the budget.
But just to start us off, Mark, what is the difference between U.S. debt and U.S. deficit?
I think here's the best way to think about it.
The deficit is how much we borrow each year.
It's the difference between our annual spending and our annual revenue.
And it's running at about $2 trillion a year.
The debt is the accumulation of all those past deficits.
It's how much we owe.
And so we were running deficits back in 2002, 2003, 2004, right?
Add all those up, add in the interest.
That's how much we owe.
And we owe well over $30 trillion.
Yeah, I want to bring up for our viewers this U.S. treasury.gov counter right now.
It says, what is the national debt?
And we have this number, $38 trillion.
I'm not even going to go through the other numbers because who knows how to pronounce that, but $38 trillion.
What does that current figure tell you about the country's fiscal condition?
Yeah, so that particular number, $38 trillion, also includes some of the money we owe ourselves.
I prefer to use a different measure.
I like to look at the debt we owe to everybody else as a share of the economy.
But it's really, really bad is the answer, because debt to GDP right now is 100%, meaning we'd have to take every dollar of all of our production in order to pay down the debt, use it for nothing else, no government services.
And of course, you can't tax the economy at 100%.
This is massive.
There's only one time in U.S. history our debt was ever this high, and it was right after World War II.
And we had a plan to pay it back.
This time, our plan is to keep borrowing at ever-increasing rates.
So it's going to be $150, $200, $250 as we project forward.
I mean, how concerned should Americans be about that, though?
I mean, those numbers sound pretty doomsday.
Yeah, I wouldn't be concerned that the economy is going to melt down tomorrow, but I'd be very concerned that this is not sustainable, right?
So in the near term, big shifts in debt can cause inflation.
We saw that in 2021, 2020, 22.
High debt can cause high interest rates.
We're seeing that now.
Your mortgage rate is higher than it otherwise would be.
But the real threat is that the debt cannot grow indefinitely faster than the economy.
And if it does, eventually it will reach a breaking point that investors will look at us and say, maybe you're not good for this money.
And that could cause some kind of crisis, a financial crisis, an inflation crisis, a big pullback in austerity.
And that would be a massive threat to everyone's standard of living.
I mean, since we're talking about crises, your organization recently took a look at the potential fiscal crises facing the U.S. First, before we get into what it says, what brought about this research?
Well, everybody asks all the time, what is the breaking point, right?
Because often, when your debt is high but sustainable, the costs are incremental.
Interest rates are a bit higher.
Wages grow a little bit slower.
Inflation is a bit higher as well.
But we've seen around the world that sometimes countries can reach a breaking point.
And at that breaking point, instead of things happening slowly, they happen very quickly and in a very damaging way.
And so we want to explore what might that breaking point look like.
And so in your report, it highlights five types of fiscal crises, starting with the concerns over which country is holding U.S. treasuries.
If we look at, it basically says that reduced confidence in U.S. Treasury markets.
You spoke a little bit about it, but why is that important and why does that top the list?
Well, remember, the United States can only be in debt if there are people that are willing to lend us money.
And some of those people that are lending us money are right here in the United States.
In fact, most are.
But many are abroad.
And there's all sorts of reasons folks would want to lend us money.
Sometimes it's geopolitical.
But often, it's because they expect to get money in return.
And so if investors look at us and they say, we're not 100% confident we're going to get our money back, we're only 95% confident.
They may start demanding higher interest rates.
And when they demand higher interest rates, that pushes us higher in debt because higher interest rates mean higher interest payments.
And if we're higher in debt, that confidence may undermine further.
And we've seen this happen in markets all the time, right?
We've seen panic over Bitcoin, over dot-com stocks, over housing.
Panic can happen very fast.
And when it does, you could have a financial crisis.
People are off-selling their bonds around the world.
And remember, U.S. Treasuries, we're the backbone of the global financial system.
So if people start selling off treasuries, what we have is a financial crisis, a global financial crisis.
Which countries hold the most U.S. Treasuries?
Well, the European Union as a whole is the biggest holder.
Individual countries, China and Japan, are very high holders, although China in particular has been starting to sell off its U.S. debt.
Which has concerned the administration a bit.
It's very concerning, yeah.
Next on that list, inflation crisis.
Managing debt levels without addressing debt growth causes.
Talk about that one.
So the United States prints, borrows in our own currency.
Excuse me.
We borrow in our own currency.
And so that gives us a cheat.
We technically don't have to worry about our lenders.
We have an alternative.
That alternative is we could print money, right?
And so if nobody's willing to lend us money, we can just print it.
That is an option.
But that option comes with consequence, and that consequence is inflation.
We've seen this happen around the world in Turkey and Argentina.
Heck, the fall of the Roman Empire, German's Weimar Republic.
When countries are up against a wall, they try to debase their currency.
They try to print their way out.
It never works.
Every single time, what you get is more money chasing the same amount of goods and services, and you get inflation.
Sometimes you get hyperinflation, and it is very hard to come back from that.
Something that we've heard a lot from the White House, of course, is his current criticism of the Federal Reserve and their actions on interest rates, basically saying that they are not cutting enough.
How does their actions and the president for that matter factor into all this?
Well, I think that a fear would be if the Federal Reserve is totally at the behest of the Treasury and itself starts to either keep interest rates at zero when they should be high or print money because that's one way that we get into this inflation crisis.
And so bullying the Federal Reserve is not helpful.
It puts us on this road to something we call fiscal dominance, which itself could be the spark of that inflation crisis.
The third thing you guys have here is the austerity crisis, sharp tax increases and spending cuts enacted to stave off a financial crisis.
Can you explain that for our audience?
This is a little confusing because the solution to avoid a debt crisis is either lower spending or higher taxes.
Those are the options, right?
We've got to close the gap.
But if you do it too fast, you can really rock the economy, right?
We're borrowing $2 trillion a year.
If we were to say all at once, we're going to raise taxes by $2 trillion or cut spending by $2 trillion starting in 2027, that would be a massive hit to the economy.
All of a sudden, people wouldn't have money to spend that they were used to spending.
Government wouldn't be building bridges that they were used to building.
The economy couldn't handle such a big shock.
It would probably put us into a deep recession, and that recession could be self-perpetuating.
That's the austerity crisis.
Now, the fourth thing you have on here, and we have two more and then I'll turn to your calls, guys.
But the fourth thing we have on here is a currency crisis, depreciation of the U.S. dollar.
How does that factor in?
So this looks a little bit like the inflation crisis, but it's got an international flavor to it, right?
Which is especially when we've evolved foreign holders of our debt, we try to get out of it by effectively making the debt easier to buy back.
But this causes big changes in trade flows that could be really damaging to the overall economy, that could undermine the financial system, that could lead to, if not total inflation, targeted inflation, basically has many of the same issues as these other crises, but with more of an international flavor.
And so how does that affect people's everyday?
Obviously, Americans are using the dollar every day to buy their groceries, to pay their bills.
How does that affect what people are experiencing every day?
Well, with any of these crises that we've talked about so far, what you would see is a sharp change in your standard of living.
It might be that you lose your job.
It might be that prices are way higher than you're used to.
It might be that mortgages are way more expensive.
Probably it's going to be all of the above.
But go back and think about the global financial crisis, 2007 to 2009.
That was devastating for people at all income levels.
If you were lower income, you were likely to be unemployed.
If you were higher income, your assets took a huge hit.
If you owned a home, the chances you were underwater was dangerously high.
These same kinds of things can happen in any of these crises.
All right, before we get back to two more of those crises, I want to turn to our calls.
Gary from Birmingham, Alabama, a Republican.
Once I click your number, you're next, Gary.
Hello.
Thank you for taking my call.
Go ahead.
Do you have a question or comment?
I have a question.
Yes.
My comment is the incentive for our federal congressional members, and that's 535, they have no incentive to really make any type of decisions one way or another for the debt because they're not impacted.
Everyone outside of that circle, we're all impacted.
Would you think that they would move with some type of urgency to make these decisions if they were impacted, say, for every week, their paycheck was impacted just like everyone else?
That's one of my questions.
The other comment I want to make is it's because of the fact that the 535, which is what I call them, are not incentivized is because the 27th Amendment allowed them to be able to manage their financial freedom.
So for my first question, could you let me know if you think that type of incentive would have them move a little quicker?
So I think the biggest problem here is that Congress is not incentivized to act on this issue.
I think that's right.
But the reason isn't mainly financial.
It's electoral.
Congress is looking at two years down the road, maybe six years down the road if you're in the Senate.
That's the longest possible time window they're looking at.
Whereas they need to be looking 10, 20, 30, 40, 50 years down the road.
That's when the crisis is going to be.
And so they're okay delivering these tax cuts, delivering these big spending programs today, because they think it's going to help them with their next election.
They're not worried about the next generation.
So that's the huge problem.
Could we make some changes like no budget, no pay, things like that?
It might help on the margin, but it also might kind of create a bifurcation where the wealthy senators keep doing what they're doing and middle class folks stop getting into politics.
I think the bigger issue is they're not accountable to the public.
And the public needs to start demanding on behalf of their kids, on behalf of their grandkids, we're not going to accept these bribes, these giveaways that we know make us richer tomorrow, but are going to make us way poorer down the line.
Don from Ohio, a Democrat.
Why Gold and Silver Rise00:05:08
You're next.
Yeah, what I call was once our debt, I mean, it gets so high that it's going to shut down.
We always use gold and silver to back our money.
And they're making, as like nine people can buy them from the Federal Reserve.
They don't come to us.
And they're selling them for like $1,600 to $2,200 a roll for silver dollars, special made.
There's like 30 quarters on my table with different designs on them since they started that.
And the problem is all our silver and gold is going to be gone.
For example, they get a take-all of them before they come to us.
And my bank in Vermean, Key Bank, and stuff, they ended up with $100 and some thousand dollars worth of silver dollars and that were supposed to just went to those collectors before they come to us.
And I bought five of them because I found out about it and couldn't get back up there because of some stuff I was doing.
And they come in and bought all $100 and some thousand dollars worth for $20 a roll and jacked it from $1,600 to $2,200 a roll.
So Don, I wonder if you have a question for Mark.
Yeah, what's going to happen to cover our, we're going to be in dirt.
There's no way of covering our dollar bills.
It's just going to be nothing because of what those handful of people are taking over gold and silver.
So I think there's some signs in the market that people are much more worried about a debt crisis than they were even a few years ago.
And a key one is we're seeing the price of gold and silver and other the last few days aside.
We're seeing the price of these precious metals skyrocket.
And the reason is people see them as insurance.
You know, they see them as more stable, more steady than the alternatives.
I don't think coinage is a major issue in changing these dynamics.
The underlying issue is people don't trust the Treasury as much as they used to.
I mean, to that point, though, and since we just talked about kind of the currency crisis in the report, Trump last week in Iowa, I'm pointing now to this Reuters article.
The headline is, Trump says value of the dollar is great as currency hits four-year low.
If you go a little bit under, it said that President Trump on Tuesday said the value of a dollar was, quote, great when asked whether he thought it had declined too much, adding pressure on the greenback, which hit a four-year low.
The dollar's recent weakness stems from multiple factors, expectations of continued Federal Reserve rate cuts, tariff uncertainty, policy validity.
But I wonder what you make of the president's assessment.
Sometimes a weak currency can be helpful, especially in the near term, because people want to buy our products when our currency is weak.
But what I'm more concerned about is why is the currency weakening?
That's what concerns me.
And what concerns me is it's weakening because people are losing faith in the U.S. Treasury.
And if that's true, then the near-term gains we get, which I think the president is right about, are going to be swamped by the long-term hit to our global standing and our ability to continue to grow.
And a question that we got via text message from Eddie in Scottsdale, Arizona, it says, is Mr. Goldwine worried about bond vigilantes dumping U.S. debt and driving up yields?
So, Mr. Goldwine, are you worried about that?
That's that financial crisis I talked about before, right?
Like, markets are fickle.
They trust you until they don't.
And if all at once they stop trusting us, it not only pushes up yields, but it devalues all the treasuries that are being held, right?
Think about it.
If I can get a 30-year at 6%, why am I going to hold on to my current 30-year at 3%?
I'm not.
I'm going to sell it off.
And if we all sell it off, bank balance sheets go under, right?
Financial institutions close.
Panic ensues, not just in the bond market, but in the stock market everywhere.
And so, in the extreme case, we get a global financial crisis.
How did the passage of the One Big Beautiful bill last summer impact the rate of debt and deficit?
Yeah, so the One Big Beautiful bill had elements that added to the debt, like the tax cuts, no tax on tips, et cetera, and elements that subtracted the debt, like the Medicaid savings, for example.
But on net, the best estimates are it is going to add about $4 trillion to the debt over the next decade.
That's a lot of money.
And, I mean, in kind of a share of the economy, it's another 0.8% of GDP added to the debt at a time that we're already deeply in debt.
The only reason that I think that our overall debt outlook hasn't worsened so much is the tariffs are offsetting not all of the cost of the One Big Beautiful Bill, but a lot of the cost.
And so if the Supreme Court rules those tariffs illegal, our deficits are just going to go up even further.
Tariffs and Debt Outlook00:01:29
C-SPAN's Washington Journal, our live forum inviting you to discuss the latest issues in government, politics, and public policy from Washington and across the country.
Coming up Wednesday morning, we'll talk about the House voting to end the partial shutdown and temporarily fund Homeland Security, as well as other congressional news of the day.
First with Illinois Democratic Congressman Brad Schneider, then with California Republican Congressman Tom McClintock, and Michael Beckle with the nonprofit Issue One on efforts by Republicans to increase federal oversight of nationwide elections.
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It'll be the first of two hearings Secretary Besant is scheduled to appear at this week on Capitol Hill.
Watch the House Financial Services Committee hearing live at 10 a.m. Eastern on C-SPAN 3.
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